Añejo tequila is a type of tequila that spends time in small oak barrels. Like all other types of tequila, añejo starts out as blanco, or white, and is aged in small oak barrels of less than 600 liters for between one and three years. It is then brought down in alcohol to between 70 and 110 proof and bottled. While it is legal to blend añejo and extra añejo tequilas together, the resulting tequila is simply añejo.
While Mexican regulations specify the size of barrel and that it must be made from either holm oak or Encino oak, there are no regulations regarding their source. Traditionally, American white oak barrels were used, with Jack Daniel's barrels being especially prized. Some producers are now aging their añejos in used reposado barrels, or in barrels that previously held scotch, other whisky, or wine. Some producers specifically look for charred barrels, to provide a sweetness from caramelized oak sugars and a smoky note.
Añejo tequila is a dark golden brown color, and is usually darker than the same producer's reposado. The barrel influence is much more prominent, with aromas and flavors of caramel, wood spice, and grilled fruit from the spirit itself. These tequilas should be treated more like a good scotch or rye -- use a proper glass, maybe a touch of cool water, and let the spirit open itself to you.
In March of 2006, a new legal type of tequila was created - extra añejo. Most of the requirements for this type are the same as for añejo tequila, extra añejo must be aged for more than three years, leading to a spirit that is heavily influenced by barrel flavors.